VISIT OF CHINESE FOREIGN MINISTER YANG TO MONGOLIA

UNCLAS SECTION 01 OF 03 ULAANBAATAR 000424

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV EMIN EINV MG CH
SUBJECT: VISIT OF CHINESE FOREIGN MINISTER YANG TO MONGOLIA

ULAANBAATA 00000424 001.2 OF 003


SENSITIVE BUT UNCLASSIFIED - NOT FOR INTERNET DISTRIBUTION.


1. (SBU) SUMMARY: During his first trip abroad since his
appointment, Chinese Foreign Minister Yang Jiechi met with Mongolian
officials June 30 to July 2 to forge closer political, economic, and
commercial ties between the two northeast Asian neighbors. Both
sides viewed this visit as a favorable continuation of the
high-level political dialogue that has occurred between Mongolia and
China over the past few years. END SUMMARY.

Political Developments
--------------


2. (SBU) On July 17, DCM and TDY PolOff Dan Nadel (notetaker) met
with Mr. Tsend Batbuyan, Deputy Director of the Department of
Neighboring Countries at the Mongolian Ministry of Foreign Affairs,
for Mongolia's perspective on the PRC Foreign Minister's visit.
Later in the day, DCM and PolOff met separately with Mr. Chai
Wenrui, Chinese Embassy Counselor (DCM),and Political Counselor Sun
Hongliang for their views of the visit. Chai noted that FM Yang met
July 2 with Mongolian President Nambaryn Enkhbayar, Prime Minister
Miegombyn Enkhbold and Chairman of the State Great Hural
(Parliament) Danzan Lundeejantsan.


3. (SBU) Chai noted that the two FMs discussed enhancing cooperation
between Chinese and Mongolian government ministries. He mentioned
that there already existed a mechanism for consultation at the Vice
Foreign Minister level and also for regular meetings between the
respective foreign ministries' Asia departments. More broadly,
there have been several senior visits over the past two years in
both directions, including visits to China by Mongolia's President
and Prime Minister. For example, Liang Guanglie, a member of
China's Central Military Commission and Chief of the General Staff
of the Chinese People's Liberation Army, visited Mongolia in late
May, and Zhang Xiaoqiang, the Vice Minister in Charge of the
National Development and Reform Commission, visited in June.


4. (SBU) According to Batbuyan, one of the most significant results
of Yang's visit was the beginning of a process of reviewing and
examining the roughly 80 bilateral agreements currently in force
between Mongolia and China. Legal experts in both governments plan
to study these agreements and suggest amendments in order to better
synchronize and, in some cases, update them.


5. (SBU) Batbuyan said the GOM also raised the issue of opening two
additional consulates in China, in the cities of Urumqi in the
Xinjiang Uygur Autonomous Region, and Shenzhen in Guangdong
Province. [Note: In addition to its embassy in Beijing, Mongolia
currently operates two consulates in China in the cities of Hohhot
and Erlian Hot, both in adjacent Inner Mongolia. End Note.] The
Chinese indicated that they were willing to consider this request.


6. (SBU) Given the importance of transportation to landlocked
Mongolia, Batbuyan noted that the two parties discussed the
continuing need to conclude an agreement between Russia, Mongolia,
and China on issues involving transit between these countries. The
Foreign Ministers pledged to sign such an agreement at the earliest
opportunity.

Strengthening Economic and Commercial Ties
--------------


6. (SBU) Chai noted that China has been the single largest investor
in Mongolia for the past nine years, and has been Mongolia's number
one trading partner for the past eight years. During that time,
China has invested over US$600 million in Mongolia, and total trade
between the two nations in 2006 was valued at US$1.5 billion.


7. (SBU) The Chinese Foreign Minister used his visit to promote
greater access for Chinese commercial interests in Mongolia --
particularly in the mining sector -- and he did not come
empty-handed. According to Chai, under the largest agreement
concluded during the visit, China agreed to donate 50 million Yuan
(over $6.6 million) to the Mongolian government. According to Chai,
the focus of the grant is yet to be agreed, but some of the funds
will be spent on the development of a sports complex, and it is
possible that other funds will be spent on development of a new
housing district. Under a second agreement, China pledged to donate
10 million Yuan (over $1.3 million) to support joint archaeological
research and excavation in Mongolia.


ULAANBAATA 00000424 002.2 OF 003



8. (SBU) And finally, a Memorandum of Understanding was concluded
between the Mongolian Academy of Sciences and the Chinese
Seismological Institute, under which the two institutions agreed to
cooperate on scientific research, and China pledged to provide
equipment to monitor seismic activity in Mongolia.


9. (SBU) For its part, the Mongolian government asked for greater
Chinese investment in infrastructure, particularly focused on roads
and railways. The Chinese agreed last year to loan the Mongolian
government US$300 million to build a hydroelectric plant on the
Eegin River.

Media Response
--------------


10. (U) Both during and after the visit, Chinese and Mongolian news
outlets expressed optimism for improved relations and discussed
further potential for mutually beneficial cooperation. Picking up
on the statements of both foreign ministers, the press made much of
the fact that this Mongolia visit marked the first of Yang's tenure
as Foreign Minister.


11. (U) Chinese media reaffirmed China's recognition of Mongolian
autonomy, a historical sore point between the two countries and one
Minister Yang hastened to salve. Many Chinese news sources called
attention to Speaker Lundeejantsan's acquiescence with the "one
China" policy and President Enkhbayar's recognition of China as
Mongolia's largest trading partner.


12. (U) Mongolian news sources also focused on the fact that this
was Minister Yang's first visit in his capacity as Foreign Minister
and the first visit of such a high-ranking Chinese official in six
years. Most outlets focused mainly on the perception of what
assistance China can provide for Mongolia, particularly in the areas
of infrastructure, trade, mining, security, and education.

Additional Topics of Discussion
--------------


13. (SBU) According to Chai, the two foreign ministers did not
discuss military issues in part because these issues were discussed
during the recent PRC PLA Chief of Staff's visit. But Batbuyan
noted that Mongolia is interested in developing military and
technical cooperation with China, and during the meetings between
foreign ministers, both sides confirmed a mutual interest in
developing greater cooperation in those sectors in the future.


14. (SBU) In the realm of higher education, the Chinese government
currently provides scholarships for 220 Mongolian students annually
to study in China. Chai noted that the Mongolians were pleased that
an increasing number of such scholarships were being made available.
The neighboring Chinese region of Inner Mongolia also has its own
program to provide scholarships to Mongolian students, covering
costs for 100 students each year.


15. (SBU) According to Batbuyan, the Chinese did not raise the issue
of bias or ill treatment of Chinese living in Mongolia. Batbuyan
noted that many construction companies employ Chinese and other
foreign workers. Such workers enter on a one-month visa, and then
overstay and become illegal laborers. He said that the two sides
are in communication regarding this problem, but it did not arise as
a topic of conversation during the Yang's visit.


16. (SBU) According to Chai, the Mongolian government expressed
interest in assisting in the 6-Party Talks with North by playing
host to one of the associated working groups. (NOTE: In a separate
July 18 meeting with Japanese DCM Kobayashi, Kobayashi said he
understood the GOM was interested in hosting the working group
related to normalizing relations between the DPRK and Japan.)

Comment
--------------


17. (SBU) Both the Chinese and Mongolian governments viewed the
visit as a great success. Chai noted the great importance that
China places on maintaining good neighborly relations, and spoke of
the visit as building a solid basis for greater mutual trust and
further partnership and cooperation. Indeed, Presidential Foreign
Policy Advisor Tsogtbaatar's personal analysis of the visit was that
it reflected Yang's view that China had not paid sufficient
attention to the relationship in recent years and had deliberately

ULAANBAATA 00000424 003.2 OF 003


sought to rectify this situation. End Comment.

MINTON